When shopping for a long-term service, comparable to insurance coverage, or getting a giant venture executed, comparable to portray your own home, NEVER go along with the primary bid. Each firm costs their product based mostly on their current expertise, and since each firms previous expertise is totally different, their pricing technique can even be totally different. One bid could be as a lot as FOUR TIMES increased than one other bid providing the identical service.
I continuously encounter questions like this on social media: “The bid for portray my rental home was $X,XXX.XX. Is that this a very good value or ought to I get one other bid?”
In fact it is best to get one other bid! No one on social media can intelligently give a solution to this query. They don’t know the specifics of the home being painted, which adjustments the worth considerably. There are too many variables: Location, high quality of paint for use, situation of the siding being painted, measurement of the home, variety of tales, variety of trim colours……
Let’s have a look at two cases the place I’d have misplaced a grand complete of $186,000 if I wouldn’t have requested for bids from a number of firms.
We personal a thirty-one unit condo advanced that has 4 buildings and a carport. It’s two tales tall, and half of the upstairs models have balconies.
We requested a painter who had painted smaller buildings for us up to now to submit a bid. He appeared on the venture and felt it was too large for him. He advisable one other firm that had extra staff to sort out such a giant venture.
Based mostly on his advice, we contacted the corporate for a bid. We anticipated the bid to be between $20,000 and $30,000. Their bid got here in at simply over $90,000!
At that value we had been contemplating doing this venture ourselves. We figured we might end the venture in about 6-8 weeks, relying on what different issues got here up throughout this time that we wished to do. Provides will probably be lower than $10,000 so we’d save $80,000 by exchanging two months of our time. That quantity would cowl our earlier 12 months’s complete dwelling bills with solely two month’s work!
We weren’t enthusiastic about taking a giant chunk of our summer season to sort out this venture, even when we might save $80,000. A number of years in the past, we undoubtedly would have executed this venture ourselves for that sort of cash and acquired the children to assist. Now the children have their very own jobs, and in our retirement, we solely do initiatives we really feel could be enjoyable.
We determined to get extra bids. Boy, am I glad we did. There are dozens of portray contractors to select from. After asking round for suggestions, we contacted three extra portray firms to bid the venture. One by no means acquired again to us. The opposite two bids got here in at $30,187 and $36,500. Clearly the primary bid, which was 3 times increased than the bottom bid, was an outlier.
We checked the references and appeared on the work of the bottom bidder; preferred what we noticed and selected him. Had we gone with the primary bid, it might have value us $60,000 extra for a similar work.
In my guide The Medical doctors Information to Actual Property Investing for Busy Professionals, I speak about all the time getting three bids. This can be a good instance of why it’s so vital to get these bids.
I encountered the identical situation when trying to find insurance coverage protection after we purchased this condo. In contrast to portray contractors, insurance coverage firms don’t construction their bids precisely the identical. Each could have the identical deductible however they may every worth the alternative of the constructing at a special quantity, and so they all provide a barely totally different protection. So it’s not a straight ahead, apples to apples comparability, however it’s shut.
The three bids I acquired for insurance coverage had been roughly $3,400, $4,100, and $9,700 a 12 months. If I had solely checked out one bid and it was the upper priced insurance coverage firm, I’d have been spending $6,300 a 12 months extra for a similar fundamental protection.
I’ve owned that constructing for 20 years. Not getting three bids would have value me $126,000 and counting. Including this to the $60,000 I saved on the portray bid, I saved $186,000 by getting one other bid on simply these two initiatives.
I as soon as requested a tree service firm to bid on a big tree pruning venture that sat on the property line. Since we had been going to separate the price with the neighbor, we would have liked to first purchase a bid that we each agreed on. The primary advisable service I known as informed me they don’t do bids. Their coverage was to return and do the venture and cost a good value. Seems they’re one of the vital costly selections on the town. They depend on individuals not bothering to get aggressive bids. Watch out if an organization won’t bid a venture, they may merely not have the time to do a bid, however additionally they might be costlier than their opponents.
We additionally had a property that wanted three very giant timber eliminated when the roots started inflicting bother to the constructing and sidewalk. Three bids had been obtained and got here again with the next quantities: $2,400, $2,500, and $7,200.
These three firms all appeared on the identical timber and knew what the venture would take. Identical to with my portray bids, the best bid was 3 times costlier than the bottom bid for a similar job.
It’s not clever to blindly take the bottom bid simply because it’s the lowest. It’s vital to be pleased with the service the bottom bidder will present, not simply the cash you’ll save. Within the portray case, I used to be in a position to have a look at previous work and speak with prior prospects to know I’d get the outcomes I wished.
Generally the bottom bid is low as a result of they’re reducing corners. Within the portray instance they may use low-cost paint, not again roll every coat, not prime the partitions earlier than portray or solely use one coat. Make sure they’re bidding on the identical high quality of labor.
Most often I’ve discovered the variable that causes the worth distinction shouldn’t be normally the standard of the work, it’s the want for revenue. If an organization occurs to have a full schedule, and so they actually don’t need extra work except it’s actually worthwhile, they may put in a extremely excessive bid. In case you are keen to pay a excessive value, they may squeeze your venture into their busy schedule, in any other case they don’t seem to be . Every thing has a value.
Alternatively, if an organization occurs to have a gap of their schedule that your venture can fill, since they actually need your venture to maintain their employees working, they could drop the worth to be able to get your enterprise.
There are a lot of initiatives that lend themselves to getting bids. These embody; residence enchancment (home addition, portray, kitchen transform, new flooring…), yard initiatives (landscaping, new sprinkler system, new deck, tree pruning and removing, yard care…), insurance coverage (car, residence, rental, life, incapacity, well being, malpractice…) occasion distributors (meals, music, flowers, photographer…) automotive repairs…
Do your self a favor and get at the least three bids for any large venture or ongoing expense. You’ll be shocked by the totally different charges firms cost for his or her providers. You may even save $186,000 like I did.
